2004 (5) TMI 428 - AT - Central Excise

Summary

Issues:
Classification of Battery Assembly for UPS under Heading 8507.00 vs. 85.04, Interpretation of Component Parts, Dispute over Classification List No. 5/94, Allegation of Clearance of Batteries vs. Battery Assemblies, Reversal of Duty under Modvat Rules.

Classification of Battery Assembly for UPS under Heading 8507.00 vs. 85.04:
The judgment deliberated on whether the Battery Assembly for UPS should be classified under Heading 8507.00 or 85.04. It was observed that the entity in question is an assembly of batteries/cells specifically designed and configured for a particular end purpose, making it more than just a battery. Applying the theme for defining component parts, the Battery Assembly was considered a component part of a UPS System, falling under Section Note 2 (b) and classified under 85.04 rather than 8507.00.

Interpretation of Component Parts:
The judgment discussed the concept of component parts of machinery, highlighting the need to distinguish between a component part of a machine and an independent entity. It referenced the proposed definition for component parts emphasizing that only parts essential for the working of the machine and given special shape or quality should be considered as component parts. This definition was deemed crucial in determining the classification of the Battery Assembly as a component part of a UPS System.

Dispute over Classification List No. 5/94:
The judgment addressed the dispute arising from Classification List No. 5/94, focusing on the classification of the Battery Assembly under this list. It was concluded that the Battery Assembly, when not supplied or removed along with the item at S. No. 1 of the list, should not be classified separately. The assembly was considered more than mere interconnections of batteries and was classified under 85.04 as component parts of a UPS System.

Allegation of Clearance of Batteries vs. Battery Assemblies, Reversal of Duty under Modvat Rules:
The judgment analyzed the allegation of clearance of batteries instead of Battery Assemblies, highlighting the importance of verifying the actual goods cleared. It was noted that if Batteries were cleared as inputs instead of Battery Assemblies, duty demand reversals would be required under Modvat rules. The issue was remitted back to the original authority for further verification and confirmation.

In conclusion, the judgment upheld the Assistant Collector's classification of the Battery Assembly, set aside the Commissioner of Central Excise (Appeals) order, and directed a re-determination of duty pursuant to the notice dated 23-1-1995 by remitting the issue back to the original authority. The appeals were disposed of accordingly, providing a detailed analysis of the classification and interpretation of component parts in the context of the Battery Assembly for UPS.